Audit 5465

U.S. Department of Health and Human Services, Passed Through the State of Nevada Department of Health and Human Services Division of Public & Behavior Health, COVID-19 Public Health Workforce, Assistance Listing Number 93.391 Criteria: As defined in 45 CFR 75, the auditee is required to maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions executed are in compliance with the terms and conditions of the federal award, including all allowable indirect and fringe cost rates. Condition: High Sierra AHEC applied allowable indirect cost rate to all direct requests for reimbursement, regardless of the amount of indirect costs actually expended. Cause: Management misunderstood the application of allowable indirect cost rates, believing that all direct expenditures were applicable to the rates, even if indirect costs had not been incurred up to or in excess of the percents allowable. As a result of the misunderstanding, internal controls to prevent and detect requests for reimbursement in excess of actual expenditures were not designed. Context: As noted in finding 2022-001, misapplication of allowable indirect cost rates was pervasive across all federal grant award funding. Effect and Known Questioned Costs: Requests for reimbursement exceeded indirect costs incurred by $32,115 for this federal award program. Repeat Finding: No U.S. Department of Health and Human Services, Passed Through the State of Nevada Department of Health and Human Services Division of Public & Behavior Health, COVID-19 Public Health Workforce, Assistance Listing Number 93.391 (Continued) Recommendation: We recommend an internal control system be designed to identify indirect costs incurred and to prevent and detect requests for reimbursement to utilize the lesser the percentage of allowable direct costs expended during the period or actual indirect costs incurred when applying allowable indirect cost rates. Views of Responsible Officials and Planned Corrective Actions: We will utilize our current profit and loss by class tracking in our general ledger software to identify indirect costs incurred and ensure the requests for reimbursement to not exceed the lesser of 10 percent of direct costs expended during the period or actual indirect costs incurred.

U.S. Department of Health and Human Services, Passed Through the State of Nevada Department of Health and Human Services Division of Public & Behavior Health, COVID-19 Public Health Workforce, Assistance Listing Number 93.391 Criteria: As defined in 45 CFR 75, the auditee is required to maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions executed are in compliance with the terms and conditions of the federal award, including all allowable indirect and fringe cost rates. Condition: High Sierra AHEC applied allowable indirect cost rate to all direct requests for reimbursement, regardless of the amount of indirect costs actually expended. Cause: Management misunderstood the application of allowable indirect cost rates, believing that all direct expenditures were applicable to the rates, even if indirect costs had not been incurred up to or in excess of the percents allowable. As a result of the misunderstanding, internal controls to prevent and detect requests for reimbursement in excess of actual expenditures were not designed. Context: As noted in finding 2022-001, misapplication of allowable indirect cost rates was pervasive across all federal grant award funding. Effect and Known Questioned Costs: Requests for reimbursement exceeded indirect costs incurred by $32,115 for this federal award program. Repeat Finding: No U.S. Department of Health and Human Services, Passed Through the State of Nevada Department of Health and Human Services Division of Public & Behavior Health, COVID-19 Public Health Workforce, Assistance Listing Number 93.391 (Continued) Recommendation: We recommend an internal control system be designed to identify indirect costs incurred and to prevent and detect requests for reimbursement to utilize the lesser the percentage of allowable direct costs expended during the period or actual indirect costs incurred when applying allowable indirect cost rates. Views of Responsible Officials and Planned Corrective Actions: We will utilize our current profit and loss by class tracking in our general ledger software to identify indirect costs incurred and ensure the requests for reimbursement to not exceed the lesser of 10 percent of direct costs expended during the period or actual indirect costs incurred.